Fintech Solutions Create Flexible Financing Options

Home values are hovering at near record highs. For many homeowners, their home is their most valuable asset and home equity can be a significant source of their wealth.

Homeowners can leverage the value of their home, such as in the form of a home equity loan and home equity lines of credit (HELOC). They may use their home equity funds to try to increase their property value by repairing or renovating the home to prepare it to sell. They may also use home equity funds to eliminate private mortgage insurance (PMI). But consumers often find that home equity financing can be overly complicated. A 2022 survey of U.S. borrowers indicated that approximately one-third of respondents thought getting a mortgage was more difficult than buying a car (31%), applying for jobs (29%) and applying to college (26%). 

Further, home equity loans and HELOCs are not without drawbacks. Borrowing against your home equity means the mortgage balance stays high, interest rates add costs, borrowers can find themselves owing more than their home is worth, credit scores can suffer, and, in the worst cases, homeowners could lose their homes due to missed payments. 

Those risks beg the question: Are home equity loans and HELOCs the best options?

Leveraging Home Equity Without a Loan

Because real estate professionals are often trusted sources of information for homeowners, they may face questions over financing options. Agents should always advise their clients to speak with mortgage lenders and financial experts over their personal financing matters. But technology could help them find some answers, too. Financial technology (aka fintech) companies are offering real estate professionals and consumers alternative financing options that may be worth exploring. 

For example, Unlock Technologies (a fintech company focused on helping consumers improve their financial status) has created a financing option—a home equity agreement (HEA)—that allows homeowners to leverage home equity without taking on a loan. The concept is fairly simple: Homeowners receive an interest-free lump sum of cash in exchange for a share of their home’s future value. Because an HEA is not a loan, there are no monthly payments. The qualification threshold is lower than traditional home equity loans and HELOCs, making HEAs an option for a wider population of consumers. Income requirements are also lower, so HEAs may be a better option for homeowners who are self-employed, retired or who may lack a steady income. 

HEA funds can be used for any purpose, including home renovations or repairs, consolidating or eliminating debt, education expenses or funding a business. Homeowners can access the wealth created via their home equity while retaining the title to their homes and avoiding additional debt.

Other potential benefits of Unlock’s HEAs include streamlined application and approval processes, including an online estimate feature that takes only minutes and won’t impact credit scores. Unlike reverse mortgages, HEAs are available to property owners of all ages, and applicants do not need perfect credit to qualify.

An Unlock HEA includes a home improvement adjustment, which means that homeowners who make significant improvements to their homes retain the value added from those improvements. 

An HEA is completed when one of the following scenarios plays out: A homeowner buys back their equity in one lump sum at any point during the 10-year term; a homeowner makes a partial buyout of Unlock’s investment; or, a homeowner settles Unlock’s investment when the home is sold. 

Curious how it works? Assume your home value was $600,000. You choose an “Investment Payment” of $60,000—10% of your home’s value. Your exchange rate is 2.0%, so your “Unlock Percentage” is 20% (10% x 2.0). If you sell your home later for $750,000, the Unlock Share is 20% of that $150,000 gain in value. For additional examples, check out Unlock’s Product Guidepdf.

It’s also important to point out, that fintech companies like Unlock are not lenders. In fact, Unlock is a team of finance, mortgage and real estate leaders dedicated to helping consumers create more financial flexibility.

The Benefits for Real Estate Professionals 

Home equity funds are plentiful. Current market data indicates that, as of August 2024, U.S. borrowers held $17.6 trillion in home equity collectively, with $11.5 trillion of that considered tappable. Further, U.S. mortgage data indicates that three in five homeowners have at least $100K in available equity.

Real estate professionals add tremendous value when they let clients know that they can have access to these funds, especially when home equity is used to repair or renovate homes. After all, every party in a real estate transaction benefits when top condition homes sell for market value in a competitive real estate landscape. 

In addition to funding home improvements, homeowners carrying high debt loads can access their home equity via HEAs to pay down debt and qualify for better mortgage rates when buying their next home. Also, homeowners who are looking for investment or rental properties can use HEAs to fund down payments. 

With high interest rates, growing personal debt and sky-high home equity values, homeowners are looking for alternative financing options. Innovative fintech solutions have the potential to expand beyond traditional home lending to include more people at more stages of their lives. Real estate professionals who are part of that financial transformation can build trust and relationships that benefit everyone. 

Read more on NAR

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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‘Unverifiable income’ can limit your mortgage options — here’s how to get around it

A number of factors can get your mortgage application denied. So-called “unverifiable income” is one of them. 

Mortgage lenders want to know if you’re financially capable of paying back the loan. One way they’ll do that is by requesting documents like your federal income tax returns, W-2 and current pay stubs, according to Freddie Mac. 

Any money that you earn that isn’t tied to a form like a W-2 or 1099 can make it difficult for a lender to verify your annual income, said Jacob Channel, an economist at LendingTree. 

For instance, income you earn from a rental property you own may be tricky for a mortgage lender to verify, he said. The same can be said for things like gifted cash for a down payment or side hustle earnings.

It’s a more common problem than you might expect.

About 12% of recent prospective homebuyers were denied a mortgage because a lender could not verify their income, according to the 2024 Profile of Homebuyers and Sellers report by the National Association of Realtors.

The NAR polled 5,390 buyers who purchased a primary residence between July 2023 and June 2024.

In such instances where you have different forms of income or are self-employed, it may be worth looking into non-conventional mortgage options, said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. 

“The good news is that there are programs available for people who don’t qualify conventionally,” she said. “But it is a little bit more expensive.”

For example, you may have to sustain higher-than-usual mortgage rates.

Here’s what you need to know.

How a non-qualified mortgage works

Some homebuyers who need more flexibility when applying for mortgages could benefit from a non-qualified mortgage, or a Non-QM loan, Cohn said.

Such loans verify income differently. If you’re self-employed, a non-QM lender can use bank statements to calculate the income that may qualify for the loan instead of a pay stub, tax return or W-2, she said.

“They might also look at what kind of assets you have,” Channel said.

Other banks and lenders will accept the most recent 1099 and do not rely upon tax returns if you’re self-employed in a business you own, Cohn said.

But, be careful. While it may be easier to qualify through income, such loans can be more costly, said Brian Nevins, a sales manager at Bay Equity, a Redfin-owned mortgage lender. 

“You may have to jump through more hoops in order to get those mortgages,” Channel said.

For example, you may need a higher credit score or be required to provide a bigger down payment.

The loan may also come with a rate higher than that of a conventional loan. That’s because non-QM loans do not follow the criteria of qualified mortgages set by the Consumer Financial Protection Bureau.

In the first half of 2024, the average initial 30-year interest rate for non-QM loans was 6.7%, compared to 6.4% for a qualified loan, according to data from CoreLogic.

A ‘stepping stone’ for unverified income

Non-QM loans are often better suited for those who invest in real estate or wealthy individuals with a number of assets, Channel said.

“In those instances, you can kind of substitute assets for active income,” he said.

Even if you suspect your income will be hard to verify, it’s smart to start with traditional loan options.

If your application for a conventional mortgage is rejected, reach out to your lender and ask why it was denied, he explained.

“Maybe you submitted the wrong year’s W-2 form. Mistakes do happen,” Channel said.

But if you’re going through a transition from being employed to self-employed, or starting a new job with a new company, a non-QM loan could be a “stepping stone,” Cohn said.

Once you start to show sufficient income on your returns, you can always apply for a refinance in the future, experts say.

“Just because you take out a non-QM loan doesn’t mean you’re stuck,” Cohn said.

Read more on CNBC

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How to track housing data to know what’s coming next

Tracking live weekly housing data would have been nearly impossible just a few years ago, but now we can gather and analyze real-time housing demand data. This valuable information can significantly enhance our understanding of housing economics and what is coming next. The question is: How can we harness the data to give you more confidence when talking about the housing market?

Mortgage rates and purchase application data

One of the things I do weekly is track how forward-looking housing demand reacts to specific mortgage rates. Here’s an example of how purchase apps have acted with particular mortgage rate ranges.

When mortgage rates were running higher earlier in the year (between 6.75%-7.50%), this is what the purchase application data looked like:

• 14 negative prints

• 2 flat prints

• 2 positive prints

When mortgage rates started falling in mid-June from the yearly peak of 7.5% toward 6%, here’s what purchase applications looked like:

• 12 positive prints 

• 5 negative prints

• 1 flat print

Mortgage rates jumped from 6% to 7% and are now down just a tad from the recent peak, and this is what the data looks like:

• 5 positive prints

• 4 negative prints

Purchase applications are tracked 30 to 90 days before they impact sales data. From the information above, we can observe that sales can increase when mortgage rates approach 6%. If rates drop below 6% and remain there for a year, we can expect significant sales growth since we are starting from a historically low baseline.

Purchase application data is at levels not seen since 1995, indicating a low-growth threshold. However, we now have a clearer understanding of where we can expect to see real improvements in these data lines.

Weekly pending contracts

Now that we see how sales can grow with mortgage demand and purchase applications, let’s look at how it tracks into our weekly pending contract data. This data shows homes going into contract, which may be reflected in the sales data in the following month or even two months later, depending on when the contract is signed.

We have observed that pending contracts improved when mortgage rates dropped to around 6%. Currently, the data shows better performance compared to 2022 and 2023, which suggests that we are establishing a firmer bottom in the data trend.

Our weekly tracker also provides an overview of our inventory data to add more context to what’s going on in the housing market. Since the lows of 2022, we have seen an increase in active inventory. This is precisely what the housing market needed as we have more choices for homebuyers and less price growth.

Existing home sales data

Given the data above, it should not be surprising that the most recent existing home sales and pending home sales from the National Association of Realtors have improved. Here, we can see that pending home sales data has improved over the last two months.

I developed my data analysis to demonstrate how to identify trends early, allowing you to move beyond waiting for the existing home sales report. We can observe the demand curve in housing data months before its appearance in traditional data channels. That’s why we created the weekly tracker for you to review.

Read more at Housingwire

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6 interior-design trends you'll probably see everywhere next year — and 4 that are disappearing

As we approach the end of the year, it's time to reflect on home decor and designs we'll want to leave behind — and pieces and styles we'll want to keep an eye out for.

Business Insider spoke to three interior designers about which home trends they think will be in and out in 2025. Here's what they said.

One designer said the line between indoor and outdoor spaces will continue to blur.

Alice Moszczynski, an interior designer at Planner 5D, told BI we'll likely start to see more seamless connections between interior and outdoor spaces.

"This goes beyond just large glass doors as designers are integrating retractable walls, natural ventilation systems, and materials that age beautifully in indoor and outdoor environments," she said.

Natural and handmade materials continue to be popular.

Moszczynski predicts materials like stone, reclaimed wood, linen, and other natural materials that bring warmth, textural richness, and authenticity to a space will become even more popular in 2025.

As people prioritize having unique, personalized spaces, we'll likely see more consumers rejecting mass-produced finishes, too.

"Expect a resurgence of materials that show imperfections, like handmade tiles and unpolished marble," she told BI.

Art-deco styles are coming back to make spaces feel both vintage and fresh.

Lucinda Loya, founder and principal designer at Lucinda Loya Interiors, expects to see a resurgence of the art-deco style next year.

The style, which has roots in Europe and boomed throughout the 1920s and 1930s, is characterized by opulence and modern, geometric patterns.

"The updated trend blends the movement's iconic chevron patterns, zigzags, and sunburst motifs with opulent materials like marble, glass, and polished metal," Loya said.

She predicts we'll see neutrals like black, white, gold, and silver paired with luxe textures like velvet to create "vintage and fresh spaces."

Mirrored surfaces are also becoming trendy.

In line with the art-deco revival, Loya told BI, mirrored, reflective surfaces will also make a comeback to give spaces a touch of glamour.

"Mirrored surfaces reflect natural and artificial light, adding depth and brightness, which is especially valuable in smaller or darker spaces," she said.

Loya also said we'll see mirrored accents paired with matte textures to create elegant designs that balance drama and restraint.

Bold, saturated colors are in.

"More people are leaning into saturated colors — deep greens, dramatic blues, and spicy oranges and golds," Matthew Coates, owner of Coates Design Architects + Interiors, told BI.

Coates expects to see more rooms telling bold, colorful stories as homeowners search for a refreshing break from all-beige interiors.

He anticipates this trend will stick around for a while as more find comfort in creating spaces that reflect themselves.

Mixed metals will be the "it" look this season.

In previous years, mixed-metal finishes might have been considered mismatched. Now, Coates said, they're becoming a popular option for a versatile look.

"Mixing metals gives a room personality and dimension, and it feels more collected over time rather than overly coordinated," he said. "It's perfect for people who want their spaces to feel relaxed but still elevated."

On the other hand, faux biophilia is on its way out.

Biophilic design, which emphasizes connection with nature, has been a popular trend in recent years, but Moszczynski believes the days of faux plants are behind us.

"The trend of artificial plants and green walls to emulate biophilia is losing appeal as people realize these elements fail to deliver the wellness benefits of genuine nature," she said.

Instead, she said, we'll likely see more living plants throughout interior spaces.

The "millennial gray" trend is losing steam.

"Gray-dominated palettes have overstayed their welcome and feel cold, monotonous, and impersonal — particularly in high-end spaces," Moszczynski said.

She predicts that earthy tones like terracotta, clay, ochre, and sage will continue to replace "millennial" gray.

Maximalism with excessive clutter will likely fall out of favor as people prioritize minimalism.

The battle between maximalism and minimalism in the home continues, but Moszczynski predicts the pendulum will swing back toward a refined level of minimalism next year.

Maximalism was pretty big throughout 2024, but people may not be looking to buy a ton of items and decor in the year ahead.

"People are craving more visual calm and functional flow in their homes," she told BI. "Excessive decor often means unnecessary consumerism, which conflicts with the growing interest in sustainability."

We may start to see fewer open-concept spaces over the next couple of years.

Over the last few years, open floor plans have become less popular, and Coates predicts we homeowners will usher in a new chapter of balancing openness and privacy in 2025.

After all, closing off part of an open space can be really impactful.

"Adding a half-wall and a vintage room divider changed the whole vibe of a friend's open-concept living room, making it cozier and more intentional," Coates said.

Read more on Business Insider

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Here’s What The Rise of Homeowners Associations Means For Buyers

When shopping for a home, many buyers may hope to avoid purchasing a property subject to a homeowners association.

But that may be easier said than done.

That’s because HOAs are on the rise in the U.S. Therefore it’s important to understand the ins and outs of these organizations before you buy.

Nearly three-quarters, or 70%, of surveyed homeowners say if they were to buy a new home in the future, they would prefer a community without an HOA, according to recent data from Frontdoor. The home repair and maintenance services company in September polled 1,005 homeowners, 85% of whom are currently part of an HOA.

Why it’s hard to avoid HOAs

Homeowners associations are composed of community residents elected to a board of directors, which govern the neighborhood by a set of rules and regulations. Homeowners pay dues to have common areas like parks, roads, and community pools maintained and repaired.

Such organizations exist for different types of properties, from single-family homes and rowhomes to condominiums and cooperatives.

The presence of HOAs in the U.S. has ballooned over recent decades. In 1970, there were 10,000 community associations with about 2.1 million residents, per the Foundation.

In 2023, about 65% of new single-family homes were built within HOAs, up from 49% in 2009, according to the U.S. Census.

Today, HOA or common-interest communities represent about 30% of the housing stock in the U.S., and house 75.5 million Americans, according to the Foundation for Community Association Research. The entity is an affiliate organization of Community Associations Institute, a membership group for HOAs and other community organizations.

Common-interest communities are becoming more typical because they provide a financial benefit for local governments, according to Thomas M. Skiba, CEO of the Community Associations Institute, a membership organization of homeowner and condominium associations.

“They don’t have to plow the street anymore [or] do all that maintenance and they still collect the full property tax value,” Skiba told CNBC, referring to local authorities.

HOA membership is more common in some areas. Florida has the highest HOA membership rate of 66.86%, or more than 4 million homes in HOAs, according to a data analysis by This Old House, a home improvement site.

“It is truly a luxury in a lot of cases to buy a home that’s not in a community,” said Steve Horvath, co-founder of HOA United, an advocacy group for homeowners in common-interest communities.

How HOAs add to homeownership costs

The price tag that comes with a common interest community will depend on it’s location and the amenities the association offers.

The mandatory membership can cost homeowners as little as $100 a year to more than $1,000 a month, depending on the community, according to the American National Bank of Texas.

Such costs tend to increase over time, and rarely go down. In Frontdoor’s survey, 51% of current HOA members said they experienced an increase in their HOA fees, and 65% say price increases happen frequently.

How to vet an HOA before you buy

Many Americans are satisfied with their HOA. About 60% of surveyed homeowners reported having a positive experience with their community, according to Frontdoor.

But others go through grievances. About 1 in 3 had some experience that made them want to move, Frontdoor found. Of those wanting to leave the neighborhood, 63% complained about fees while 53% cited inconsistent rule enforcement.

“Sometimes HOAs can be really intrusive,” like what colors you can choose from to paint the exterior of your house, said Jim Tobin, CEO of the National Association of Home Builders.

If you’re currently in the market for a home and are unsure if an HOA community is right for you, here are a few things to consider in the shopping process:

• Ask your real estate agent or the home seller’s agent for a copy of all the HOA paperwork like covenants, bylaws, fee schedule, rules and regulations, experts say. Also ask for meeting minutes, whether annual general meeting minutes or board meeting minutes for the past 12 months, Horvath said. Such documents can be very telling about how an HOA is operated, he said.

• Inquire about monthly or annual fees, the HOA’s budget and the history of how assessments have grown over the years, according to Skiba.

• Ask your real estate agent or the seller’s agent if the house you want to buy has any unpaid assessments, said Horvath. Such outstanding balances should be dealt by the seller as part of the sale.

• Review any pending litigation, disputes or existing judgements within the community, said Horvath.

• Look into the community’s reserve funds, which ensures repair and renovation. Check if the community is putting enough money aside for big expenses or if they are property funded, Skiba said.

• Ask if you can attend a board meeting or the member’s annual general meeting if possible.

Read more on CNBC

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If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

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